3/21/2013 3:45 PM ET|
What's not in your report may hurt
Positive information can really boost your credit scores, but it may not always be included. Here's what you can do to ensure a balanced view of your history.
When it comes to credit scores, we're often too critical, focusing on the negatives rather than the positives. But it's positive information — such as accounts paid on time and credit cards with low balances — that can really boost your credit scores.
So what happens when your good credit references aren't showing up on your credit reports? A consumer who goes by the screen name Vishu Pulle recently posted this question in the Credit.com forums:
"I have a secured card from 08/25/2012, but I can't generate or add a credit report. Prior to this I had no credit history."
Another reader, David, posted this question on the blog post "Can you force a bank to report to the credit reporting agencies?"
"I have a credit score of a 640 with Equifax but not scoreable on Transunion and Experian. My bank only reports to one to credit agency. I've been trying to get a home loan, what can I do?"
Vishu and David are both right to be concerned that their single account is not appearing on all of their credit reports. While it's hard to have high credit scores with only one account, you have to start somewhere.
There are several ways that good credit references, such as secured cards and bank loans paid on time, can help your credit:
Accentuate the positive. Everyone knows a positive payment history helps your credit scores. But there's more to it than that, says Barry Paperno, Credit.com's community director and a credit-scoring expert.
"One of the things the score looks at is the proportion of positive to negative items," Paperno says. That means that even if your credit report lists negative information, such as late payments or bankruptcy, for example, having accounts that are paid on time can help to offset that negative information.
"People know that the more negative information, the worse it is for your scores; but, conversely, the more positive information, the better," he says.
Length of credit history. The score will look at the average age of all your accounts, as well as the age of the oldest and newest accounts. "Older accounts can help — even a paid-off mortgage," Paperno says.
Credit mix. The credit score considers the mix of different types of accounts you have. Ideally, you want to have both installment and revolving accounts listed.
Why is the good stuff missing?
So what are some of the reasons why good credit references may not appear on your credit reports?
Lenders don't report. This is probably the most common reason why references aren't on your reports. Not all lenders report their customers' payment histories to the credit-reporting agencies. Some report only negative information. And others, as in the case of David's bank, report to only one or two agencies. There's nothing you can do to force a lender to report accounts that it normally doesn't report, because the credit-reporting system is voluntary. And credit-reporting agencies generally don't allow you to add individual credit references because they have to make sure any companies that report -- called "furnishers" in federal law -- follow the Fair Credit Reporting Act. It's simply too expensive and time-consuming to work with furnishers on a case-by-case basis.
If you are trying to build or rebuild your credit, it's especially important to make sure that your payment history on any loans or secured cards you get will be reported to all three credit-reporting agencies. Otherwise, those references really don't count.
In Vishu's case, it may simply be too soon to expect this account to be reported. When he wrote to us, his account was not yet 60 days old, and it sometimes takes 45 to 60 days or longer for new accounts to show up. He should contact the lender and ask what its credit-reporting policy is. If it says it does report positive information on a regular basis to all three bureaus, then he should double-check that the personal information it has on file for him is correct. If the account doesn't show up within another 30 days or so, he should contact the lender again and ask it to re-report his account.
In David's case, he is going to have to either build credit by obtaining a secured card or another account that reports to all three agencies. He can also check out eCredable.com, which may be able to help him build credit using other types of payments he already makes.
More from Credit.com:
- Can you really get your credit score for free?
- The ultimate credit-report cheat sheet
- How often does your credit report change?
Social Security number mix-ups. If your information is confused with someone else's, it may end up on that other person's credit report instead of yours. The Social Security number is not the only item used to match information with the correct credit file, but it is important. If you are missing crucial positive information, one of the first things you can do is to ask your spouse to check his or her credit reports to see if the account appears there, Paperno says. "It's possible the lender flipped the Social Security numbers when it first reported the account," he explains.
Invisible accounts. If you disputed an account previously and the credit-reporting agency could not verify it, the agency may have suppressed that trade line so it would not be included in your credit report. The information is still available to the agency, but it's essentially invisible because it is not included in your report.
These types of disputes are hard to pursue because you don't necessarily know when information is suppressed or missing. One option is to use this sample letter to request your "full file" disclosure. Another option, if you've already received your credit report through another source such as AnnualCreditReport.com or a credit monitoring service, is to file a dispute asking the credit-reporting agency to include the missing account if that information is available. If you go that route, include the full account number in your correspondence. Paperno says that makes it easier for the agency to find the account. You can also file a dispute with the lender that should be reporting the account.
Closed accounts that disappear. Old accounts are normally reported for quite a while after they are paid off, but that's not always the case. The lender may stop reporting them, for example, or the credit-reporting agency may drop them from your credit file if they become quite old and you have a lot of other, newer accounts. Again, it's hard to get these kinds of accounts added back to your reports since there are no requirements that they be included. However, you may try reaching out to the lender or filing a dispute with the credit-reporting agencies.
Finally, if your goal is to build or rebuild credit, be sure to review your credit reports at least once a year and monitor your credit scores monthly with Credit.com's free Credit Report Card. You'll be able to keep track of how your on-time payments help your credit scores, and focus on the positive instead of the negative.
More from Credit.com:
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One problem with the credit score system is that it's used as leveridge to force people to pay for unsatisfactory service. 4 yrs after refusing to pay AT&T $150 for cancelling a terrible mobile internet service I am still be hounded by collection agencies for this so called debt, for what, I should pay a fine for cancelling bad service? Yes, I am the bad guy, and I should have to pay higher interest because i didn't pay for poor service. It's basically a conviction without due process, credit scoring should be illegal, it's one sided and incomplete, thousands of bills paid on time seem to be largely ignored.
Banks don't tell you outright, we need to make as much money as we can, so we have to find a negative to expose so we can charge you higher interest. Do they read one report or three or do they have na average of the 20 to 25 other credit reporters you have never heard of. Banks are there to make money.
Been with one bank for 25 years, never a bounced check, no late charges,paid off car loan several times through this bank. Applied for a pre-approved loan and were told yes. Got home and was called and told no. The underwriter said no. Our bank couldn't give us the pre-approved loan. No loan, no debt, When you live with cash only, worries go out the door.
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